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NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
V.K. Jain, Presiding Member
Maharashtra Tourism Development Corporation Through its Managing Director, Shri Akhilesh Shukla — Complainant
versus
Dena Bank & Ors. —Opp.Parties
Consumer Case No. 259 of 2014
Decided on 3.6.2016
For the Complainant :Mr. Pallav Sisodia, Sr. Advocate with Mr. Anshuman Animesh, Ms. Sakshi Kaushik, Mr. Darpan Bhuyan & Mr. Rudresh Jagadle, Advocates
For the Opp.Party :Mr. Jos Chiramel, Mr. Ajay Singh, Mr. Harish Gupta, Mr. Shreejith and Mr. R.R. Lokhande, Advocates & Mr. Arvinder, Officials of Dena Bank
IMPORTANT POINT
Bank is vicariously liable for wrong doings of its officials/ employees.
Headnote:Consumer Protection Act, 1986—Section 2(1)(d)—Banking—Fixed Deposit—Forgery—What is a commercial purpose is a question of fact to be decided in facts of each case and it is not value of goods that matters but purpose for which goods brought are put to—Same would be equally applicable to for hiring or availing services—Earning interest by temporary deployment surplus funds in a bank is altogether different from business activities such as manufacturing, trading or rendering services—Main source of income of MMRDA is sale of land for development—Neither of complainants is a finance company or otherwise engaged in business of collecting and deploying funds—It cannot be said that surplus funds were invested by them with bank as a part of their respective business activities or to promote, advance or facilitate such activities—It would be difficult to say that deployment of funds was made for a commercial purpose. (Paras 5 and 6)
(B) Consumer Protection Act, 1986—Section 21—Banking—Fixed Deposit—Forgery—Term Deposit Accounts in name of complainants could be opened by bank only after obtaining prescribed KYC documents such as address proof and identity proof which were required to be verified with originals and signature of authorized persons, to be taken in the presence of a bank official—Procedure prescribed by bank for opening Fixed Deposit account was not followed—Bank was not expected to open account without authorized signatory of MMRDA actually attending branch along with original documents of his address and his identity and without verification of his signature by comparing the same with signature on KYC documents—There is absolutely no explanation from bank as to why customer relationship form and specimen signature card were left blank and why even photograph of account holder was not affixed on specimen signature card—Bank was vicariously liable for wrong doings of its officials/ employees—Bank directed to pay principal amount to complainant. (Paras 13, 16, 17, 25 and 28)
Result:Complaint allowed.
Key Points: - Bank is vicariously liable for wrongdoings of its officials; deficiency in service established against bank (!) (!) (!) - FDRs and related actions involved forged documents and lack of proper KYC/verification; bank failed to follow procedure for opening accounts and granting overdraft/loans (!) (!) (!) (!) (!) (!) (!) (!) - Complainants MTDC and MMRDA deemed not to be finance companies; deployment of surplus funds not clearly for commercial purpose; discussion of "commercial purpose" as a question of fact (!) (!) (!) (!) - Relief directions: pay principal amounts plus interest; discharge of FDRs; deliver forged receipts; costs borne by parties (!) (!) (!) (!) (!) - Court emphasizes negligence of bank employees but also criticizes conduct of MTDC/MMRDA officials; administrative actions suggested for other agencies (!)
What is the bank's liability for the wrongdoings of its officials in opening and operating fixed deposit accounts and related facilities?
What is the issue of consumer status and whether the complainants were consumers under the Consumer Protection Act in relation to investment/FD activities?
What is the appropriate relief or remedy against the bank for deficiency in service and forged/fraudulent FDRs, including payment of principal and interest?
V.K. Jain, Presiding Member—The complainant in Consumer Complaint No. 947 of 2015 is a statutory authority set up under the Provisions of Mumbai Metropolitan Region Development Authority Act, 1974. The said complainant invited quotations from Banks for investment of the surplus funds to the extent of Rs.800 crores for a period of one year. In response to the said notice, the opposite party namely Dena Bank (hereinafter referred to as ‘Bank’) offered interest @ 9.99% per annum for a Fixed Deposit of Rs. 350 crores for a period of 366 days. Thereupon, the complainant transferred a sum of Rs.350 crores to the bank through RTGS on 19.03.2014. Vide letter dated 19.3.2014, alleged to have been sent by Fax, the bank was requested to issue Term Deposit Received for Rs. 350 crores. On 21.3.2014, an additional sum of Rs.1.50 crores was transferred by the complainant to the Bank through RTGS and the bank was requested to issue the Fixed Deposit Receipt in the name of the complainant. The said letter dated 21.3.2014 is also alleged to have been sent by Fax. The bank issued 45 Fixed Deposit Receipts (Annexure P-5 (Colly) to the complaint).
The complainant received a letter dated 05.7.2014 from the Sr. Inspector of Police, EOW, Unit-I, CB,CID, Mumbai informing it that a fraud had been committed in respect of its Fixed Deposits with the bank and an amount of Rs.45 crores had been siphoned off. When the complainant contacted the bank to ascertain the status of the said Fixed Deposit Receipts, it was informed that the said Fixed Deposit Receipts were not original. Vide letter dated 10.7.2014, the bank informed the complainant that they had found that an overdraft account had been opened in its name and in the said overdraft account there was an outstanding of Rs.45.23 crores against the fixed deposits. It was further stated in the said letter dated 10.7.2014, that the original Fixed Deposit Receipts duly discharged by the complainant were held by the Branch and the matter of creation of overdraft had been referred to the CBI for investigation. Vide letter dated 15.7.2014, the Bank forwarded the copies of the documents relating to the opening of the overdraft account and grant of the loan against the Fixed Deposit Receipts to the complainant. The complainant reiterated to the bank that it had not applied for grant of any overdraft facility nor had it collected the cheque book from the bank. The bank was also asked to authenticate the Fixed Deposit Receipts which were in the possession of the complainant. The complainant handed over all the 45 Fixed Deposit Receipts of Rs.351.50 crores to the bank, vide letter dated 28.11.2014. On 02.1.2015, the bank informed the complainant that the signature on the said Fixed Deposit Receipts did not match with the signature of the bank officer.
On maturity of the Fixed Deposit Receipts, the bank has refused to pay the proceeds to the complainant on the ground that the Fixed Deposit Receipts in the custody of the complainant were forged documents, whereas the bank required genuine Fixed Deposit Receipts issued by it, before it could pay the maturity amount of the Fixed Deposits to the complainant. The bank also sought to adjust from the proceeds of the Fixed Deposits, the amount outstanding in the overdraft account opened in the name of the complainant MMRDA. Being aggrieved, the complainant is before this Commission, seeking the following reliefs:
“a) The opposite party bank be held liable for deficiency in service;
b) The opposite party bank be directed to pay Rs.3,88,05,85,615/- to the complainant being the repayment of 45 FDRs as due and payable on maturity dates viz. 20.3.2015 and 22.3.2015;
c) The opposite party bank be directed to pay further interest @ 11.99% p.a. at quarterly rest on the aforesaid amount as per Clause (b) w.e.f. 20.3.2015 till the repayment of the amount of Rs.3,88,05,85,6
